File photoHYDERABAD: The city's sluggish realty market, which was lulled into complacency by the statehood agitation and the global financial crisis, is poised to see the highest addition in office space by 2020, overtaking that of India's top office market, Bengaluru, for the first time.

However, this does not dethrone Bengaluru from the pedestal of having the highest absolute office stock. "While Bengaluru stands at 130 million sqft, Hyderabad's office stock availability is at 45 million sqft currently," said Veera Babu, managing director, Cushman & Wakefield, Hyderabad.

But as of now, the city of Nizams is expected to add nearly 38 million square feet of office space between 2018 and 2020 as against an addition of 31m sqft in Bengaluru during the same period, according to Cushman & Wakefield.

"For the first time, Hyderabad will see the highest ever space addition till 2020, taking over Bengaluru," Veera Babu. "The availability of a large talent pool, good infrastructure and a stable government coupled with 25% lower occupancy costs than Bengaluru makes Hyderabad an attractive bet for both developers and investors."

Some of the top office space additions in Hyderabad under construction include India's largest project -- the 10m sqft project of My Home-RMZ joint venture, the 5m sqft venture of Phoenix-Embassy, and the nearly two million sqft projects each of GAR Corp and RMZ.

According to data compiled by Cushman & Wakefield, over 26m sqft of office space in Hyderabad will be added in the non-special economic zone (SEZ) segment. Developers like Salarpuria, RMZ and Phoenix will be building this in locations like Gachibowli and Madhapur. Office space projects with an area of around 17m with SEZ status will be added by developers like Phoenix-Embassy, GAR Corp, Tishman Speyer, totalling over 38m sqft by 2020. These developers are constructing projects in the range of 1m sqft to 5m sqft apart from several smaller projects in the range of 0.5m sqft.

The top players adding office space in Bengaluru till 2020 include Embassy which is building over 6m sqft, followed by Bagmane which is developing over 4m sqft. Others include Kalyani, Prestige and Brigade developing several projects measuring over a million sq ft in areas like ORR, Electronic City and North Bengaluru, which includes Whitefield.

Embassy group, one of Bengaluru's largest developers, will be building nearly 5m sqft of cumulative office space at various locations of Hyderabad by 2020.

Jitu Virvani, chairman, Embassy group, said, "While Hyderabad has been attractive due to its talent pool availability and lower occupancy costs, the interest was marred due to the global financial crisis and the statehood agitations. However, the proactiveness of this government has enthused faith in the market and that is why we are expanding in a big way."

This addition of supply will also help existing companies expand more proactively and attract new occupiers.

"With new supply coming in and projects being developed by developers from other cities, their existing clients will find it easier to expand here given the trust factor with the developer," says Veera Babu. "Secondly, it creates a level playing field as prices tend to correct with more supply, so existing occupiers will find it easier to expand."

While the average rentals in Bengaluru's Outer Ring Road (ORR) is Rs 75 per sqft, it hovers at around Rs 55-60 per sqft in Madhapur area of Hyderabad.

"The coming of major global technology giants like Google, Microsoft, Apple and Amazon, among others, to Hyderabad has helped us boost our expansion plans," said Virvani of Embassy.

G Ram Reddy, Confederation of Real Estate Developers' Association of India's Telangana Chapter president, said Hyderabad's real estate market suffered for nearly seven years due to the statehood agitations and couldn't do well despite the talent pool and lower costs.

"A lot businessmen belonging to Andhra were apprehensive of working in the state post bifurcation. However, business picked up as the new government provided assurances for the Andhra business community," said Reddy.